This is all great, but the reality is the S&P 100 and Nasdaq 100 are not following.

The number of New Highs – New Lows is not supporting higher index levels either.

The number of Growth Stocks hitting new highs is also posting relatively low numbers.

This market continues to be driven by Energy and Real Estate issues.

While we have witnessed money flow into technology and cyclicals, the technical conditions of these sectors is sluggish.

Our concerns over the lack of performance from technology issues will either pass in time or worsen in light of a deteriorating market. Technology is the backbone of a healthy market.

Just as the stock market serves as a leading indicator of the economy, markets led by Energy are often reflecting an economy that will hit the top of its cycle months down the road.

Our speculation goes to the stock market, not the economy.

Because we are not seeing heavy selling, and the trend remains up, we continue to wave the Green Flag.

Given market conditions, we have not seen a whole opportunity from individual stocks, though have been ringing the cash registernonetheless.

Technically speaking:

All of the major indexes are trading above their major moving-averages which are stacked “trend-up”, with the 20-days above the 50-days, which are above the 200-days. This is no major trading signal to us, but a recognition of the nature of the rally that began in April.

The Dow Industrial Average ($INDU), -0.10%, continues to be the most vulnerable of the major indexes with significant overhead resistance to be reckoned with.

The S&P 500 ($SPX), +0.04%, marched to a new high, and closed the week with a bearish “doji” chart candlestick.

Nasdaq ($COMPQ), +0.23%, also hit a new high and closed with a bearish “doji” candlestick.

Russell 2000 ($RUT), +0.29%, followed the pattern of the S&P and Naz by hitting a new high and closing with a bearish “doji.”

It should be noted that we don’t place a whole credence in charting candlesticks unless they occur on high volume and/or relatively large trading ranges.

Volume indications continue to portray a buyer’s bias with the S&P 500 and posting two days of accumulation a piece. The Dow had one day of accumulation and one day of distribution.

New Highs – New Lows is telling us that the though the major indexes are moving higher, the number of individual issues doing so is not increasing. Highs – Lows for The New York Stock Exchange hit its peak July 11th, and has been showing bearish divergence ever since.

The Advance/Decline Line is giving us no signal at present.

Investors Intelligence continues to show a significant number of Bulls over Bears. From a historical perspective this is not good for buyers. We have yet to max out the scale here, and recognize the number of Bulls could easily increase before serving as a tradable warning.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The 10-year Note Holdr (TLT) continues to trend down after coming shy of its high made 2003.

The U.S. Dollar Index ($DXC) and The Gold Miners Index ($XAU) have been trading sideways over the past five weeks, with the Dollar poised to break out of a lower base and the Gold Miners bearish in head-and-shoulders fasion. We don’t see a setup in either vehicle. We recognize the difference between generic patterns and opportunity.

Consumer Cyclicals ($CYC) have outperformed the Consumer Staples ($CMR) over the past couple of months, but for the week the Staples held a modest edge. Neither index has broken out to new highs, though the Staples are close.

The Semiconductor Index ($SOX) failed to take out last week’s high. Going forward the 500 area will serve as an important resistance mark.

Banks ($BKX) have been trend-down for the past two weeks. Per Thompson Financial, financial issues have been experiencing heavy insider selling.

Broker Dealers ($XBD) had their first losing week after eight winning ones.

Retail ($RLX) hit a fresh high before settling in a “doji.”

Internet stocks ($IIX) remain sluggish as a group. With significant overhead resistance the index closed the week in “doji” form.

Telecoms ($XTC) remain in strong technical form as they came within a hair of Juanuary’s high.

Healthcare ($HCX) broke out to a new high.

Biotech ($BTK) failed to take out last week’s high, though remains trend-up.

REIT’s ($DJR) hit another new high. For what many media pundits deemed “a bubble”, we saw an opportunity.

Homebuilders ($DJUSHB) failed to hit a new high and showed slight distribution. Nothing to act on at this juncture, but perhaps a first step in a correction?

Transportation ($TRAN) crept past last week’s high and is holding ground after knocking out its bearish condition.

Airlines ($XAL) were quiet as a group and are “triangled” in a lower base formation.

Defense ($DFX) hit another new high.

Energy ($IXE) hit another new high.

Basis Materials ($A1BSC) was lackluster while holding ground near the half-way point from this year’s high.

Utilities ($UTY) edged out last week’s high, though are just shy the year’s high. We assume this sector will continue to go in step with the price of bonds over the long run.